California Civil Code 731.09 – (a) Whenever a tenant is authorized by the terms of the …
(a) Whenever a tenant is authorized by the terms of the transaction by which the principal was established or by law, to use any part of the principal in the continuance of a business which the original owner of the property comprising the principal had been carrying on, the net profits of such business attributable to such principal shall be deemed income.
(b) Where such business consists of buying and selling property, the net profits for any period shall be ascertained by deducting from the gross returns during, and the inventory value of the property at the end of, such period, the expenses during, and the inventory value of the property at the beginning of, such period.
Terms Used In California Civil Code 731.09
- Continuance: Putting off of a hearing ot trial until a later time.
- Income: as used in this chapter means the return derived from principal. See California Civil Code 731.03
- Principal: as used in this chapter means any realty or personalty which has been so set aside or limited by the owner thereof or a person thereto legally empowered that it and any substitutions for it are eventually to be conveyed, delivered, or paid to a person, while the return therefrom or use thereof or any part of such return or use is in the meantime to be taken or received by or held for accumulation for the same or another person. See California Civil Code 731.03
- property: includes property real and personal. See California Civil Code 14
- Tenant: as used in this chapter means the person to whom income is presently or currently payable, or for whom it is accumulated or who is entitled to the beneficial use of the principal presently and for a time prior to its distribution. See California Civil Code 731.03
(c) Where such business does not consist of buying and selling property, the net income shall be computed in accordance with the customary practice of such business, but not in such way as to decrease the principal.
(d) Any increase in the value of the principal used in such business shall be deemed principal, and all losses in any one calendar year, after the income from such business for that year has been exhausted, shall fall upon principal.
(Added by Stats. 1968, Ch. 193.)